An inventory model under development cost-dependent imperfect production and reliability-dependent demand

Abstract

This paper considers a model that deals with an imperfect production process where both perfect and imperfect quality items are produced. Here, demand depends on selling price and reliability of the product. Each manufacturing company expects to produce perfect quality items. But due to the long-run process, several kinds of problem such as labor, machinery, and technology arise. As a result, the manufacturing system becomes out-of-control state and consequently produces both perfect and imperfect quality items. Perfect items are ready to sell but imperfect items are reworked at a cost to become perfect. Reworking cost, reliability of the product and reliability parameter of the manufacturing system can be improved by introducing the development cost and also by improving the quality of the raw material of the production system. Under such circumstances, a profit function has been developed to find the optimum values of reliability parameter of the manufacturing system, reliability of the product and duration of production such that a manufacturer gets a maximum profit. Finally, the model has been illustrated with some numerical examples exploring the sensitivity analysis with respect to some parameters.